The mouse mammary tumor virus (MMTV) has emerged as the leading model system for the study of gene regulation by steroids at the transcriptional level. Hormone activation of transcription from the MMTV long terminal repeat (LTR) is contingent upon binding of the activated glucocorticoid receptor at the glucocorticoid response element (GRE) located upstream from the promoter. We sought to elucidate the molecular events at the promoter which occur on hormone activation. We have utilized a series of cell lines in which MMTV LTR fusion genes are amplified on extrachromosomally replicating bovine papilloma virus (BPV) "minichromosomes." Using an exonuclease protection assay on chromatin in isolated nuclei, we detected high resolution binding of factors to the steroid-activated MMTV promoter. No factors are bound with high affinity to the inactive promoter. In addition we determined that the factors responsible for the exonuclease-resistant complex established at the hormone-activated promoter are apparently equal in abundance and DNA-binding affinity in crude extracts from non- stimulated cell nuclei. Activation of transcription at the MMTV promoter therefore appears to result from recruitment of preformed transcription factors to the promoter by the steroid receptor. In experiments in which the accessibility of promoter chromatin was probed with restriction endonucleases, we demonstrated a hormone-dependent increase in accessibility of the sequences closely associated with transcription factor binding sites. These results suggest that transcription factor binding sites are sequestered by nucleoprotein structure in the inactive promoter and that activation occurs, in part, by receptor-mediated alterations in local nucleoprotein structure. Finally, mutations which result in increased activity of the non- stimulated promoter in the presence of an upstream enhancer element were found to cause increased restriction enzyme sensitivity of the promoter and increased transcription factor binding in the absence of hormone.